Today’s debt success story features Kim Anderson and her family. Today Kim shares how her and her husband paid off their mortgage is less than two years.
How did you acquire $93,000 in debt? What did that debt consist of?
The $93K was all mortgage debt for the house we live in.
What did it feel like to have that much debt?
It felt quite normal since mortgage debt is pretty common. We figured it was just one of those debts you have that you don’t really pay off because it’s unlikely that we would stay in one house for 30 years. Plus 93K to 27-year-olds is a ton of money.
How long did it take you to pay it all off?
When we first started playing around with an amortization table and our budget, we figured out that it would take us about 4 years to pay it off if we increased our principle payments each month. But once we started, we got obsessed with seeing the amortization table change month by month and so we started throwing as much money as possible toward the debt including bonuses, gifts, tax returns and any money left over in our budgeted categories each month. To our surprise we knocked it out in under 2 years on one income.
What resources did you use to help you through this process?
We originally got the idea to pay off our mortgage from Dave Ramsey. I kept having fraudulent charges on my credit cards and was spending hours on the phone with customer service and got so fed up that I Googled, “Cash Only Guy” and his name came up. I went to the library and snagged Total Money Makeover, and read the whole book before my husband got home from work. The book talked about paying off debts one by one and the only debt we had was our house. So I cut up the credit cards, adopted the cash envelope system for 2 years, we did a monthly budget together and before we knew it we were home free. We didn’t do it Dave’s way exactly but he gave us the idea that it was possible. I also made it a point to listen to The Dave Ramsey Show as much as I could because the debt free stories inspired me. An amazing source of debt free inspiration now is His and Her Money as Talaat and Tai do an amazing job of interviewing people and their debt free stories. So I would highly recommend that people subscribe to their Youtube channel and podcast on iTunes!
Did you face any challenges along the way?
The challenges were mostly social. We stopped eating out with friends and doing the activities we were used to doing with our 20-something friends. It was hard when everyone around us was getting new cars, new things and all the things that society makes us feel like we need. We didn’t tell people what we were up to so I always worried that people assumed we were having financial issues, when we were in fact putting the restrictions on ourselves.
How did this affect your marriage?
We grew so much closer. We coined ourselves, “TEAM ANDERSON” and it was something we said at the end of every budgeting session with a high five! Getting on the same page about finances literally stopped our money fights. Money is a non-fight issue even to this day 4 years later.
What were you doing for a living while you were paying off the debt?
My husband was an electrical engineer and I was a stay at home spouse who did some writing projects on the side as this was a few years before I started my thrifty lifestyle blog.
How did it feel once you paid it all off?
People always ask how it felt the first time we walked into our house after we made our last payment. Frankly, I was happy but it felt normal. The real magic happened when we sat down to do our budget for the first time without a mortgage payment, because suddenly we had extra money to dream with. It was money that didn’t have to go to any necessities. The first thing my husband did was cash roll flight lessons and got his pilot’s license, and paid cash for it. Next thing we knew a car bit the dust, but it was okay because we had a car budget line item we had been paying money into each month so we just went down and bought a new-to-us used car with cash. No sweat. It’s a freeing feeling to know that your money belongs to you and not some lender.
What practical tips do you have for people looking to pay off their debt?
- Do a budget together. Figure out how much you make, how much you need to survive and decide how much you can put toward paying off your debts. One of the keys to our success was putting extra automatic payments on our principle each month. We didn’t have to think about it then.
- Make saving money a game. See how much you can avoid spending from your budget in categories like groceries, gas and dining out. Put what’s left over onto your debt payoff each month.
- Consider hiding then destroying your credit cards. I didn’t believe we could actually survive without them so I didn’t cut them up for 6 months, I just hid them away. Six years later, I’ve still never needed them.
Kim Anderson is the author, blogger & podcaster behind ThriftyLittleMom.com. Kim’s goal is to help families make the most of what they have while finding joy in everyday living. To learn more about Kim and her journey out of debt, head on over to her blog.
Note: This is part of a series called Debt Success Stories which features people who were able to pay off a significant amount of debt. If you have a Debt Success Story I would love to hear about it. Please visit the contact page to let me know the details.
Refinance Your Student Loans or Credit Card Debt
With the average credit card interest rate around 15%, this could save you a ton of money over the long haul. SoFi will refinance your credit card debt to as low as 5.99% so that you can pay your debt off even faster. Use this link to get $100 cash back if you get approved. They also refinance student loans to as low as 2.355% APR.
Have a Lower Credit Score?
Check out Credible instead as they are able to help people refinance to a lower rate that don’t have great credit.